<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 25, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________________ TO _______________
Commission File No. 0-27424
-------
WILMAR INDUSTRIES, INC.
-----------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2232386
-------------------------- -------------------
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
303 Harper Drive
Moorestown, New Jersey 08057
---------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 439-1222
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ____________
---
The number of shares of the registrant's common stock, no par value,
outstanding as of July 30, 1999 was 12,396,860.
<PAGE>
ITEM 1 - FINANCIAL STATEMENTS
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS - (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 25, December 25,
1999 1998
------------------ ------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 22,665,807 $ 30,611,955
Cash - restricted 302,371 297,236
Accounts Receivable - trade, net of allowance for doubtful
accounts of $1,279,760 in 1999 and $1,399,200 in 1998. 33,542,107 27,535,016
Inventory 30,704,081 30,128,680
Prepaid expenses and other current assets 596,412 385,992
Deferred income taxes 1,439,000 1,498,000
----------------- -------------------
Total current assets 89,249,778 90,456,879
PROPERTY AND EQUIPMENT, net of accumulated depreciation
of $5,186,058 in 1999 and $4,740,501 in 1998. 4,725,112 4,183,348
GOODWILL, net of accumulated amortization of $1,293,230 in 1999
and $973,445 in 1998. 21,814,075 22,133,860
INTANGIBLE ASSETS AND OTHER, Net 4,700,145 4,921,704
----------------- -------------------
TOTAL ASSETS $ 120,489,110 $ 121,695,791
================= ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 500,000 $ 1,208,518
Accounts payable 17,295,385 11,991,661
Accrued expenses and other current liabilities 4,970,097 4,294,425
Income taxes payable 263,331 412,160
----------------- -------------------
Total current liabilities 23,028,813 17,906,764
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000 shares authorized;
none issued Common stock, no par value - 50,000,000 shares
authorized;
12,396,860 shares issued and outstanding in 1999 103,640,168 103,568,743
13,389,827 shares issued and outstanding in 1998 6,623,692 220,284
----------------- --------------------
Retained earnings 110,263,860 103,789,027
Less: Treasury stock, at cost (1,000,000 shares in 1999) (12,803,563)
----------------- --------------------
Total stockholders' equity 97,460,297 103,789,027
----------------- --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 120,489,110 $ 121,695,791
================= ====================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
<PAGE>
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 25, June 26, June 25, June 26,
1999 1998 1999 1998
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
NET SALES $ 55,017,147 $ 49,658,989 $ 103,764,261 $ 93,204,244
COST OF SALES 39,095,538 35,356,091 73,147,394 66,292,163
-------------- -------------- --------------- ---------------
Gross profit 15,921,609 14,302,898 30,616,867 26,912,081
OPERATING EXPENSES:
Operating and selling expenses 7,595,486 6,761,759 14,769,073 12,874,681
Corporate general and administrative expenses 3,172,369 2,878,776 6,083,587 5,520,886
-------------- -------------- --------------- ---------------
Total operating expenses 10,767,855 9,640,535 20,852,660 18,395,567
-------------- -------------- --------------- ---------------
Operating income 5,153,754 4,662,363 9,764,207 8,516,514
INTEREST INCOME, NET 295,148 392,182 647,801 774,922
-------------- -------------- --------------- ---------------
Income before income taxes 5,448,902 5,054,545 10,412,008 9,291,436
PROVISION FOR INCOME TAXES 2,097,800 1,946,000 4,008,600 3,509,400
-------------- -------------- --------------- ---------------
Net income $ 3,351,102 $ 3,108,545 $ 6,403,408 $ 5,782,036
============== ============== =============== ===============
Net income per share - Basic $ 0.26 $ 0.23 $ 0.49 $ 0.43
============== ============== =============== ===============
Net income per share - Diluted $ 0.26 $ 0.23 $ 0.49 $ 0.43
============== ============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
<PAGE>
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) -
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Accumulated
Deficit) / Total
Common Stock Retained Treasury Stockholders'
Shares Amount Earnings Stock (Deficit) Equity
------------ ------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 26, 1997 13,335,754 $ 102,793,984 $ (12,244,900) $ -- $ 90,549,084
Exercised Stock Options 48,350 360,446 360,446
Tax Benefit from Exercised Stock Options 283,600 283,600
Issuance of Common Stock - Apartment Cleaning
Acquisition 5,723 130,713 130,713
Net income 12,465,184 12,465,184
------------ ------------- ------------- ------------- -----------
13,389,827 $ 103,568,743 $ 220,284 $ - $ 103,789,027
BALANCE, DECEMBER 25, 1998
7,033 46,655 46,655
Exercised Stock Options
Tax Benefit from Exercised Stock Options 24,770 24,770
Repurchase of Common Stock (1,000,000) (12,803,563) (12,803,563)
Net income 6,403,408 6,403,408
------------ ------------- ------------- ------------- ----------
12,396,860 $ 103,640,168 $ 6,623,692 $ (12,803,563) $ 97,460,297
BALANCE, JUNE 25, 1999 ============ ============= ============= ============= ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
<PAGE>
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the Six
Months Ending Months Ending
June 25, 1999 June 26, 1998
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES :
Net Income $ 6,403,408 $ 5,782,035
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,095,901 992,508
Deferred income taxes 59,000 (26,000)
Loss (gain) on disposition of property and equipment 12,939 11,704
Changes in assets and liabilities, net of effects of acquisition:
Accounts receivable (6,007,091) (3,791,166)
Inventory (575,401) (6,870,716)
Prepaid expenses and other current assets (215,555) (396,669)
Intangible assets and other (17,861) 223,300
Accounts payable 5,303,724 4,757,952
Accrued expenses and other current liabilities 675,672 1,278,831
Income taxes payable (124,059) (78,319)
-------------- --------------
Net cash provided by operating activities 6,610,677 1,883,460
-------------- --------------
INVESTING ACTIVITIES :
Purchase of property and equipment (1,093,899) (901,290)
Proceeds from sale of property and equipment 2,500
Acquisition of businesses, including escrow - (1,747,132)
-------------- --------------
Net cash used in investing activities (1,091,399) (2,648,422)
-------------- --------------
FINANCING ACTIVITIES :
Repayment of notes payable (708,518) (25,000)
Purchases of stock for treasury (12,803,563)
Net proceeds from exercise of stock options 46,655 283,978
-------------- --------------
Net cash (used in) provided by financing activities (13,465,426) 258,978
-------------- --------------
NET INCREASE IN CASH (7,946,148) (505,984)
CASH, BEGINNING OF PERIOD 30,611,955 30,723,746
-------------- --------------
CASH, END OF PERIOD $ 22,665,807 $ 30,217,762
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for :
Interest $ 13,763 $ 1,673
============== ==============
Income taxes $ 1,014,475 $ 4,030,149
============== ==============
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of Common Stock in connection with the purchase of :
Apartment Cleaning Supply and Pool Supply, Inc. $ 130,713
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
<PAGE>
WILMAR INDUSTRIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
- ------------------------------
The condensed consolidated financial statements include the accounts of Wilmar
Industries, Inc. ("Wilmar" or the "Company") and its subsidiaries. Inter-
company balances and transactions have been eliminated.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, such interim statements reflect all adjustments
(consisting of normal recurring adjustments) necessary to present fairly the
financial position and the results of operations and cash flows for the interim
periods presented. The results of operations for these interim periods are not
necessarily indicative of the results to be expected for the full year ending
December 31, 1999. These financial statements should be read in conjunction
with the audited consolidated financial statements and footnotes included in the
Company's Form 10-K for the year ended December 25, 1998.
Note 2 - Accounting Policies
- ----------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, (collectively referred to as "derivatives") and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The effective date for this statement
(orginally for all fiscal quarters of fiscal years beginning after June 15,
1999) has been delayed until July 1, 2000. Management has not yet determined
what effect, if any, this statement will have on the Company.
Note 3 - Income Taxes
- ---------------------
The Company provides for income taxes based upon SFAS No. 109, "Accounting for
Income Taxes", which requires an asset and liability approach to financial
accounting and reporting for income taxes.
Note 4 - Computation of Basic and Diluted Net Income Per Share
- --------------------------------------------------------------
Net income per share presented for all periods have been computed in accordance
with SFAS No. 128, "Earnings per Share." Basic net income per share is computed
by dividing net income by the weighted-average number of shares outstanding
during the period. Diluted net income per share is computed by dividing net
income by the weighted-average number of shares outstanding during the period,
assuming dilution.
The amounts used in calculating net income per share data are as follows:
<TABLE>
<CAPTION>
For the Three For the Three For the Six For the Six
Months Ended Months Ended Months Ended Months Ended
June 25, 1999 June 26, 1998 June 25, 1999 June 26, 1998
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Net Income $ 3,351,102 $ 3,108,545 $ 6,403,408 $ 5,782,036
=========== =========== =========== ===========
Weighted Average Shares
Outstanding - Basic 12,683,873 13,362,415 13,029,005 13,349,921
Effect of Dilutive Stock Options 98,366 144,735 114,680 146,982
----------- ----------- ----------- -----------
Weighted Average Shares
Outstanding - Diluted 12,782,239 13,507,150 13,143,685 13,496,903
=========== =========== =========== ===========
</TABLE>
Options to purchase 403,813 and 48,200 shares of common stock that were
outstanding during the three months ended June 25, 1999 and June 26,1998
respectively, as well as the option to purchase 331,588 and 45,825 shares of
common stock that were outstanding during the six months ended June 25, 1999 and
June 26,1998, respectively, were not included in the computation of weighted
average shares outstanding - Diluted because the options' exercise price was
greater than the average market price of common shares.
<PAGE>
WILMAR INDUSTRIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
Note 5 - Contingencies
- ----------------------
The Company is involved in various legal proceedings in the ordinary course of
its business, which are not anticipated to have a material adverse effect on the
Company's results of operations or financial position.
Note 6 - Subsequent Events
- --------------------------
In July 1999, the Company acquired certain assets of The Mini Blind Company
("Mini Blind"), a distributor of vertical and mini blinds to the multi-family or
apartment housing market, based in San Antonio, TX. The total purchase price of
the acquisition was paid in cash. Goodwill and other intangibles recorded in
connection with this acquisition will be amortized on a straight-line basis. The
acquisition is being accounted for using the Purchase method.
<PAGE>
WILMAR INDUSTRIES, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
This document contains certain forward-looking statements that are subject to
risks and uncertainties. Forward-looking statements include certain information
relating to future growth plans, the anticipated costs associated with those
plans, the Company's liability and capital resources, as well as information
contained elsewhere in this report where statements are preceded by, followed by
or include the words "believes," "expects," "anticipates" or similar
expressions. For such statements the Company claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Actual events or results may differ materially
from those discussed in forward-looking statements as a result of various
factors, including without limitation, general market conditions, increased
competition, failure to locate and acquire acquisition candidates, and factors
discussed elsewhere in this report and in the documents incorporated herein by
reference. The following discussion should be read in conjunction with the
interim financial statements and the notes thereto contained elsewhere in this
report on Form 10-Q.
Results of Operations
Six Months Ended June 25, 1999 Compared to Six Months Ended June 26, 1998.
Net Sales. Net sales increased by $10.6 million, or 11.3%, to $103.8 million
for the six months ended June 25, 1999 from $93.2 million for the corresponding
period in 1998. This increase was attributable to continuing penetration of
existing sales territories, sales force additions, the Company's telesales
effort and increased sales to national accounts. Sales attributable to the
existing sales force (salesmen employed for all of both periods) increased 9.9%.
In addition, the acquisitions of certain assets of Apartment Cleaning Supply and
Pool Supply, Inc. ("ACSPS"), the California-based American Maintenance Supply,
Inc. ("AMS-CA"), the Nevada-based American Maintenance Supply, Inc. ("AMS-NV")
and Kurzon Supply Company, Inc. ("Kurzon"), which occurred in June 1998, March
1998, May 1998 and November 1998, respectively, also contributed to the
Company's growth. Price increases during both periods were modest and made only
on selected items. During the six months ended June 25, 1999, Wilmar generated
approximately $5.5 million in net sales to new end markets as a result of the
Company's decision to target customers outside its core apartment housing
market.
Gross Profit. Cost of sales includes merchandise, freight, distribution center
occupancy and delivery costs. As a percentage of net sales, gross profit was
29.5% for the six months ended June 25, 1999 compared to 28.9% for the
corresponding period in 1998. The increase is attributable to the July 1998
divestiture of our high-end appliance division, as well as the Company's
continuing merchandising efforts.
Operating and Selling Expenses. Operating and selling expenses consist of labor
and other costs associated with operating a distribution center as well as
selling expenses and commissions. Operating and selling expenses increased by
$1.9 million, or 14.7%, to $14.8 million for the six months ended June 25, 1999
from $12.9 million for the corresponding period in 1998. As a percentage of net
sales, these expenses represented 14.2% for the six months ended June 25, 1999
compared to 13.8% for the corresponding period in 1998. This increase was
primarily due to the Company's continual investment in its field sales force.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased by $563,000 or 10.2%, to $6.1 million for the
six months ended June 25, 1999 from $5.5 million for the corresponding period in
1998. This increase is primarily the result of the enhanced staffing required to
manage a larger volume of business. As a percentage of net sales, corporate
general and administrative expenses represented 5.9% for both the six months
ended June 25, 1999 and the six months ended June 26, 1998.
Operating Income. Operating income increased by $1.2 million, or 14.7%, to $9.8
million for the six months ended June 25, 1999 from $8.5 million for the
corresponding period in 1998. As a percentage of net sales, operating income
was 9.4% for the six months ended June 25, 1999 compared to 9.1% for the
corresponding period in 1998
Interest Income. Net interest income for the six months ended June 25, 1999 was
$648,000 and $775,000 for the corresponding period in 1998. The interest income
occurred as a result of the investment income from the proceeds of the secondary
public offering completed in July 1996. The decrease in interest income was a
result of the Company's stock repurchase program. During the six month ended
June 25, 1999 the Company repurchased one million shares of common stock at an
average price of $12.80.
<PAGE>
WILMAR INDUSTRIES, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations, Continued
Results of Operations
Three Months Ended June 25, 1999 Compared to Three Months Ended June 26, 1998
Net Sales. Net sales increased by $5.4 million, or 10.8%, to $55.0 million for
the three months ended June 25, 1999 from $49.7 million for the corresponding
period in 1998. This increase was attributable to continuing penetration of
existing sales territories, sales force additions, the Company's telesales
effort, increased sales to national accounts. Sales attributable to the
existing sales force (salesmen employed for all of both periods) increased 10%.
In addition the acquisitions of MSC and certain assets of ACSPS, AMS-CA and AMS-
NV which occurred in September 1998, June 1998, March 1998 and June 1998
respectively, also contributed significantly to the Company's growth. Price
increases during both periods were modest and made only on selected items.
During the three months ended June 25, 1999, Wilmar generated approximately $3.1
million in net sales to new end markets as a result of the Company's decision to
target customers outside its core apartment housing market.
Gross Profit. Cost of sales includes merchandise, freight, distribution center
occupancy and delivery costs. As a percentage of net sales, gross profit was
28.9% for the three months ended June 25, 1999 compared to 28.8 % for the
corresponding period in 1998. This expected decrease in the gross margin was a
result of the following factors: (1) a larger volume of HVAC sales, which are
seasonal in nature and have lower gross margins, and (2) the higher relative
occupancy costs relating to the operation of the Company's new distribution
centers in San Antonio, Las Vegas and Boston also contributed to the decrease in
gross margin when compared with the three months ended June 26, 1998.
Operating and Selling Expenses. Operating and selling expenses consist of labor
and other costs associated with operating a distribution center as well as
selling expenses and commissions. Operating and selling expenses increased by
$834,000, or 12.3%, to $7.6 million for the three months ended June 25, 1999
from $6.8 million for the corresponding period in 1998. As a percentage of net
sales, these expenses represented 13.8% for the three months ended June 25, 1999
compared to 13.6% for the corresponding period in 1998. This decrease was
primarily attributable to the acquisition of MSC, which though it had not yet
been fully assimilated into our system until May 1998, had been operated very
efficiently as a stand-alone company.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased by $294,000, or 10.2%, to $3.2 million for the
three months ended June 25, 1999 from $2.9 million for the corresponding period
in 1998. This increase is primarily the result of the enhanced staffing required
to manage a larger volume of business. The Company expenses all distribution
center pre-opening costs when incurred.
Operating Income. Operating income increased by $491,000 or 10.5%, to $5.2
million for the three months ended June 25, 1999 from $4.7 million for the
corresponding period in 1998. As a percentage of net sales, operating income
was 9.4% for the three months ended June 25, 1999 and June 26, 1998. Excluding
assimilation and pre-opening expenses, operating income as a percentage of net
sales would have been 9.5% for the three month ended June 26,1998 and 9.6% for
the same period in 1998.
Interest Income. Net interest income for the three months ended June 25, 1999
was $295,000 and $392,000 for the corresponding period in 1998. The interest
income occurred as a result of the investment income from the proceeds of the
secondary public offering completed in July 1996. The decrease in interest
income was a result of the Company's stock repurchase program. During the three
month ended June 25, 1999 the Company repurchased 900,000 shares of common stock
at an average price of $12.57.
<PAGE>
WILMAR INDUSTRIES, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations, Continued
Results of Operations
Three Months Ended June 25, 1999 Compared to Three Months Ended June 26, 1998
Liquidity and Capital Resources
Historically, Wilmar's primary source of liquidity has been cash flow from
operations, supplemented by borrowings under its bank line of credit to support
increases in accounts receivable and inventory, net of accounts payable, and the
public sale of its securities.
On March 19, 1999, the Company announced that its Board of Directors had
approved a stock buyback program whereby it may repurchase up to one million
shares of its common stock. Such repurchases may be made from time to time in
open market transactions at prevailing prices or in privately negotiated
transactions on terms mutually agreed upon. As of May 11, 1999, the Company had
repurchased one million shares at an average price of $12.80 per share.
Cash provided by operating activities was $6.6 million during the six months
ended June 25, 1999 compared to $1.9 million of cash provided by operating
activities during the corresponding period in 1998. Cash provided by operating
activities during the six months ended June 25, 1999 consisted of $6.4 million
of net income before adding back depreciation and amortization and other non-
cash charges, decreased $941,000 by changes in operating assets and
liabilities. This primarily resulted from a $5.9 million increase in accounts
payable, accrued expenses and income tax payable offset by an decrease in the
accounts receivable and inventory of $6.8 million.
Cash used in investing activities during the six months ended June 25, 1999 was
$1.1 million, which was used for the purchase of property and equipment, net of
$2,500 proceeds from sales of property and equipment.
Cash used in financing activities during the first six months of 1999 was
approximately $13.5 million, consisting of approximately $709,000 used for
repayment of notes, $12.8 million for the purchase of stock for treasury offset
by proceeds of $47,000 received from the exercise of stock options.
Capital expenditures were $1.1 million for the six months ended June 25, 1999
compared to $901,000 for the corresponding period in 1998. Capital expenditures
for the first six months of 1999 were primarily for the improvement and updating
of the Company's distribution centers, and the integration of its new supply
fulfillment system. The Company intends to finance its future capital
expenditures with cash flow from operations and possibly with a portion of the
previous public offerings, term debt or capital leases.
Wilmar's credit facilities consist of two unsecured bank lines of credit
totaling $15 million. These lines of credit had zero balances at June 25,1999.
In 1999, the Company renewed an existing $10 million unsecured bank line of
credit, which bears interest at three quarter percent below the bank's prime
rate, as well as a $5 million unsecured bank line of credit, which bears
interest at the bank's prime rate. These credit facilities expire in September
1999. The Company anticipates renewing these credit facilities as they expire.
The Company believes it could increase the amount of these credit facilities if
needed, although there can be no assurance that it could do so on equally or
more favorable terms.
The Company believes that its existing cash balances, supplemented by borrowings
under the revolving line of credit, are adequate to meet planned operating and
capital expenditure needs at least through 1999. However, if the Company were
to make any significant acquisitions for cash, it might be necessary for the
Company to obtain additional debt or equity financing.
<PAGE>
WILMAR INDUSTRIES, INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations, Continued
Year 2000 Compliance
The Company recognizes that the arrival of the Year 2000 ("Y2K") poses a
worldwide challenge to the ability of all systems to recognize the date change
from December 31, 1999 to January 1, 2000. The Company has completed its
assessment of in-house maintained software, third party software and systems.
All identification and remediation of Y2K related systems issues have been
completed. System testing of Y2K program revisions and overall system testing is
under way and will be completed in October, 1999.
All costs associated with the Y2K project to date have been expensed as
incurred. These costs have not been and are not anticipated to be material to
the Company's financial position, results of operations or cash flows in any
given year, and such cost have been and is expected to continue to be funded
from the Company's operations. The Company's total estimated cost of the Y2K
compliance program is approximately $50,000 to $100,000. A significant portion
of these costs are not likely to be incremental costs to the Company, but rather
will represent the redeployment of existing information technology resources.
The Company has the necessary resources in-house to complete all required Y2K
remediation.
Based on it's review, the Company does not believe the transition from 1999 to
2000 will have any adverse effect on operations attributable to any of its
computerized systems, However, there is no guarantee that computing systems and
associated applications of other companies with which the Company conducts
business will be converted on a timely basis or that a failure by said companies
to address their Y2K compliance problems would not have a material adverse
impact on the Company.
To date, the Company has not established a formal contingency plan for dealing
with a failure by either the Company or its third party vendors to achieve Year
2000 compliance. However, it recognizes the need to develop contingency plans
and expects to have these plans secured, where applicable by the end of Fiscal
1999.
<PAGE>
WILMAR INDUSTRIES, INC.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
27* Financial Data Schedule
___________________
* Filed herewith
(b) Reports on Form 8-K
-------------------
The Company did not file a Form 8-K during the quarter ended June 25, 1999.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WILMAR INDUSTRIES, INC.
By: /s/ William Sanford
------------------------------------
William Sanford
Senior Vice President and Chief Financial Officer
(Duly authorized and Principal financial officer)
Date: August 9, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-25-1999
<CASH> 22,968,178
<SECURITIES> 0
<RECEIVABLES> 34,941,307
<ALLOWANCES> (1,399,200)
<INVENTORY> 30,704,081
<CURRENT-ASSETS> 89,249,778
<PP&E> 9,465,613
<DEPRECIATION> (4,740,501)
<TOTAL-ASSETS> 120,489,110
<CURRENT-LIABILITIES> 23,028,813
<BONDS> 0
0
0
<COMMON> 103,640,168
<OTHER-SE> 6,623,692
<TOTAL-LIABILITY-AND-EQUITY> 120,489,110
<SALES> 55,017,147
<TOTAL-REVENUES> 55,017,147
<CGS> 39,095,538
<TOTAL-COSTS> 39,095,538
<OTHER-EXPENSES> 10,767,855
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 295,148
<INCOME-PRETAX> 5,448,902
<INCOME-TAX> 2,097,800
<INCOME-CONTINUING> 3,351,102
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,351,102
<EPS-BASIC> 0.26
<EPS-DILUTED> 0.26
</TABLE>
